* Shell Midstream's IPO raises about $920 million
* Shares open at $32 and touch a high of $33.30
* 40 million common units sold at $23 per share (Adds analyst's comment, details, updates shares)
By Amrutha Gayathri
Oct 29 (Reuters) - Shares of Shell Midstream Partners LP, a master limited partnership formed by Royal DutchShell Plc, rose as much as 45 percent in their marketdebut, in the latest MLP offering to win investor confidence.
Royal Dutch Shell is the first of the industry majors totake an MLP public as a means of monetizing assets whilelowering the cost of capital.
MLPs are corporate structures that pay no taxes at thefederal level and pay out most of their cash flows as dividendsto investors.
Under the MLP format, the Anglo-Dutch oil company retainscontrol of 71 percent of the company.
Shares of Shell Midstream opened at $32 and touched a highof $33.30, valuing the company at about $2.25 billion, based onits 67.5 million outstanding common units.
"Investors have warmed up to MLPs because, I think, theyincreasingly believe that interest rates won't head highersoon," Jack Ablin, chief investment officer of BMO Private Bankin Chicago told Reuters.
Higher returns from MLPs have found favor with investors ina low bond yield environment.
Shell Midstream's IPO follows successful listings by otherMLPs, such as PBF Logistics LP and GasLog Partners LP in May.
PBF's shares were up about 8 percent above their IPO priceof $23, while GasLog shares were 26 percent above their IPOprice of $21.
Shell Midstream's listing comes as a fall in energy priceshastens the decline of big oil, with Western majors selling offassets, cutting investments, returning money to shareholders andshrinking in size.
Seven oil majors, including Shell, BP Plc, ExxonMobil Corp and Chevron Corp, ran a collectivedeficit of $55 billion last year, according to Morgan Stanleyanalysts.
Shell's U.S.-listed shares were up nearly 1 percentat $72.11 in morning trading.
The company's IPO raised about $920 million after the sizeof the offering was increased and priced above the expectedrange.
About 40 million common units were sold at $23 per share,above the expected price range of $19-$21.
Houston, Texas-based Shell Midstream owns minority interestsin two crude oil pipeline systems along the Texas and LouisianaGulf Coast and offshore Louisiana.
It also owns minority interests in two refined productspipeline systems that connect the Gulf Coast and southeasternU.S. refineries to major demand centers from Alabama to NewYork.
Shell Midstream said it planned to use proceeds from theoffering to buy stakes in Royal Dutch Shell's other pipelines.
Barclays and Citigroup were the lead underwriters for theIPO, the company said in a filing with the U.S Securities andExchange Commission. (http://bit.ly/1iG7z6c) (Reporting by Amrutha Gayathri in Bangalore; Editing by SavioD'Souza and Simon Jennings)
